Nelnet (NNI) & Its Rivals Critical Analysis

Nelnet (NYSE: NNI) is one of 99 public companies in the “Business Support Services” industry, but how does it weigh in compared to its peers? We will compare Nelnet to related businesses based on the strength of its risk, dividends, analyst recommendations, profitability, valuation, earnings and institutional ownership.

Profitability

This table compares Nelnet and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nelnet 20.19% 9.65% 0.75%
Nelnet Competitors -53.63% -160.13% 0.55%

Valuation & Earnings

This table compares Nelnet and its peers gross revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Nelnet $861.56 million N/A 9.57
Nelnet Competitors $1.10 billion $177.92 million 23.31

Nelnet’s peers have higher revenue and earnings than Nelnet. Nelnet is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

Nelnet has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Nelnet’s peers have a beta of 1.13, indicating that their average stock price is 13% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Nelnet and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nelnet 0 1 1 0 2.50
Nelnet Competitors 626 1859 2606 62 2.41

Nelnet presently has a consensus price target of $53.50, suggesting a potential downside of 9.21%. As a group, “Business Support Services” companies have a potential downside of 6.56%. Given Nelnet’s peers higher possible upside, analysts clearly believe Nelnet has less favorable growth aspects than its peers.

Dividends

Nelnet pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Nelnet pays out 9.1% of its earnings in the form of a dividend. As a group, “Business Support Services” companies pay a dividend yield of 1.1% and pay out 28.4% of their earnings in the form of a dividend.

Insider & Institutional Ownership

40.8% of Nelnet shares are held by institutional investors. Comparatively, 62.1% of shares of all “Business Support Services” companies are held by institutional investors. 45.4% of Nelnet shares are held by insiders. Comparatively, 12.6% of shares of all “Business Support Services” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Nelnet peers beat Nelnet on 8 of the 14 factors compared.

Nelnet Company Profile

Nelnet, Inc. focuses on delivering education-related products and services and student loan asset management. The Company is engaged in student loan servicing, tuition payment processing and school information systems, and communications. The Company’s segments include Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce, Communications, Asset Generation and Management, and Corporate and Other Activities. The Company earns fee-based revenue through its Loan Systems and Servicing, Tuition Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. Corporate and Other Activities include real estate and other investments. The Company, through Allo Communications LLC, is engaged in the sale of advanced telecommunication services, including Internet, broadband, telephone, and television services.

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